THE PRESIDENT: I just met with my Cabinet, had the opportunity to
brief them about my trip overseas. I talked about the visit to Poland
and to Russia, where we've got good friends in both those countries --
at least in terms of their leaders.

And then I went to the G8 in Evian, France. The message there was
is that America and Europe can do a lot together. We can make the
world more peaceful, we can make the world more free, we can work
together to help fight the pandemic of AIDS in Africa. There's a lot
we can do together. We need to put our differences in the past and
combine our efforts. We can do -- trade together so our people can
find work. And I left feeling very good about our relations in
Europe.

Then I went to the Middle East and started the -- started the march
to peace. And I'm optimistic about our chances to bring a peaceful,
free Palestinian state in existence, to live by side-by-side with a
secure Israel. We've got a lot of work to do, but I was pleased with
the response of Prime Minister Sharon. He's a courageous leader,
dedicated to the security of the Israeli people, as are we -- but also
recognizing that life can be better for the Palestinians.

And I appreciate the leadership of Prime Minister Abbas, the new
Prime Minister of the Palestinian Authority, who spoke eloquently and
clearly about the need for the free world to fight off terror in order
for a Palestinian state to emerge.

And then I went over to Qatar. Had a very good visit with
Ambassador Bremer and General Tommy Franks, and we talked about the
need for our coalition to continue to make steadfast progress in Iraq
so that the people of Iraq will be able to eventually run themselves.
And we are making steadfast progress.

Finally, we talked about domestic matters. Secretary Snow briefed
us on the economy. And we're optimistic about our economy, but we
won't rest until we're certain that people who are looking for work and
who want to work can find a job. The jobs and growth package passed by
the Congress can be very beneficial to those who look for work.

We also talked about the possibilities of Congress getting a good
Medicare bill out. I will spend time this week discussing Medicare
with the American people. Secretary Thompson briefed us on the
progress being made by the Congress, and I want to thank the
congressional leadership for showing the determination that's going to
be necessary to get a good Medicare package out for America's seniors.

I'm proud of my Cabinet. I want to thank them for their good work
and really proud of the team we have put together here.

I'll answer a few questions. Tom, and then Patsy.

Q Mr. President, since you left the Middle East there's been a
new outbreak of violence, three main Palestinian militant groups have
claimed responsibility for it. Prime Minister Abbas says he will not
use force to control these groups and Prime Minister Sharon has been
criticized by right-wing members of his own party. Why are you so
optimistic?

THE PRESIDENT: I'm optimistic because I was able to listen to the
Prime Ministers of Israel and the Palestinian Authority talk about the
need for peace and for a state.

Listen, I recognize there's going to be extremes, particularly in
the Palestinian territories, that want to blow up peace. But I think
people are sick of it. The average Palestinian must understand that
their lives will improve with the vision of Prime Minister Abbas. And
the Arab neighborhood understands that violence will lead to nothing
except misery and the lack of hope. And so I'm optimistic that
responsible leaders have now got the message that we must combine to
work to fight off the terror attacks so that a peaceful Palestinian
state can emerge.

And, listen, I understand there's going to be a lot of work to do,
but I'm prepared to lead. And we're sending a team in place.
Ambassador Wolf will be on the ground soon, holding people to account
and working to strengthen Prime Minister Abbas so that he can deliver
on his promise -- a promise he made not only to me personally, but a
promise he made to the Israeli officials. And the promise was is that
he will work as hard as he can to fight off those elements within the
territories that want to use violence to destroy any hope for peace,
and, therefore, use violence to destroy the hopes of the Palestinian
people.

Q Sir, is U.S. credibility on the line over weapons of mass
destruction in Iraq?

THE PRESIDENT: I'm not exactly sure what that means. I mean, Iraq
had a weapons program. Intelligence throughout the decade showed they
had a weapons program. I am absolutely convinced with time we'll find
out that they did have a weapons program. The credibility of this
country is based upon our strong desire to make the world more peaceful
and the world is now more peaceful after our decision; the strong
desire to make sure free nations are more secure -- our free nations
are now more secure; and the strong desire to spread freedom. And the
Iraqi people are now free and are learning the habits of freedom and
the responsibilities that come with freedom.

I read a report that somehow, you know, that there is no al Qaeda
presence in Baghdad. I guess the people who wrote that article forgot
about Al Zarqawi's network inside of Baghdad that ordered the killing
of a U.S. citizen named Foley. And history will show, history -- time
will prove that the United States made the absolute right decision in
freeing the people of Iraq from the clutches of Saddam Hussein.

Kyle, last question.

Q Sir, do you have anything for us on the dollar? It continues
to slide.

THE PRESIDENT: Yes.

Q The rhetoric continues to be that we favor a strong dollar
policy, but there doesn't seem to be much of anything helping to prop
it up.

THE PRESIDENT: The policy of this government is a strong dollar
policy. I spent time talking about the -- our dollar policy at the
G8. And I reminded our G8 partners that there is a difference in
interest rates, particularly between Europe and the United States, and
that interest rate differential has caused people to sell dollars to
buy euros to get a higher return on investment. And that's why you're
seeing pressure on the dollar.

And, of course, the European Union is, like the United States, has
got an independent organization that sets monetary policy. But you'll
see a -- you'll see different behavior as interest rate spreads begin
to narrow between Europe and the United States.

But I'll repeat as clearly as I can, the policy of the United
States government is a strong dollar policy.